FOREST HOLDINGS LIMITED v MANGATU BLOCKS INCORPORATION [2018] NZHC 1782

FOREST HOLDINGS LIMITED v MANGATU BLOCKS INCORPORATION [2018] NZHC 1782 [18 July2018]IN THE HIGH COURT OF NEW ZEALANDTAURANGA REGISTRYI TE KŌTI MATUA O AOTEAROATAURANGA MOANA ROHECIV-2016-470-000158[2018] NZHC 1782BETWEEN FOREST HOLDINGS LIMITEDApplicantAND MANGATU BLOCKS INCORPORATIONRespondentHearing: On the papersCounsel: M D Branch for the ApplicantZ G Kennedy and M D Toulmin for the RespondentJudgment: 18 July 2018JUDGMENT OF WOOLFORD JThis judgment was delivered by me on Wednesday, 18 July 2018 at 4:30 pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors:Harkness Henry, HamiltonMinter Ellison Rudd Watts, Auckland[1] These proceedings are part of a long running claim by Forest Holdings Limited(Forest Holdings) against Mangatu Blocks Incorporation (Mangatu) in respect of thewrongful termination of a forestry right Mangatu had granted in favour of ForestHoldings.[2] The claim came to the High Court by way of an application by Forest Holdingsfor leave to appeal against a damages award made by an arbitrator, Hon BJ PatersonQC, on 29 July 2016 in which he found that "The prospect of [Forest Holdings]obtaining other than a nominal damages award on its capital loss claim appear to beminimal."[3] Heath J granted leave to appeal in a judgment dated 14 November 2016. Hethen heard the appeal on 13 December 2016 and in a judgment dated 15 March 2017,allowed the appeal and set aside the damages award made by the arbitrator. Mangatuthen applied for leave to appeal Heath J's decision to the Court of Appeal. In ajudgment dated 31 May 2017, Heath J refused Mangatu leave to appeal to the Courtof Appeal.[4] Heath J has now retired. The proceedings have been referred to me todetermine the issue of costs in the High Court. Mangatu submits that it is entitled tocosts on a 2B basis for the three High Court hearings. It also submits that it isappropriate in all the circumstances that this court make non-party costs orders againstForest Holdings' sole director and effective sole shareholder, Mr Roderick Scott.[5] Mangatu notes that Heath J expressly reserved costs so as not to foreclose anargument for Mangatu that "[Forest Holdings] appellate exercise had been pointless"and submits that Forest Holdings' appeal was, in fact, pointless because in asubsequent ruling on damages dated 7 March 2018, the arbitrator reached the sameconclusion as in the damages award set aside by Heath J namely, "It is thereforedetermined that in respect of its loss of chance claim FHL cannot recover more thannominal damages".[6] On the other hand, Forest Holdings submits that it is entitled to costs on a 2Bbasis for the three High Court hearings. It also submits there is simply no basis for anon-party costs order against Mr Scott.[7] Forest Holdings submits that Heath J was wrong to reserve costs. It furthersubmits that whether the application was pointless cannot in fact be determined untilForest Holdings' intended application for leave to appeal the latest decision of thearbitrator has been heard and finally determined and in all likelihood until thearbitration is concluded.Discussion[8] I am of the view that the general costs principles dictate the result in the presentcase. First, the party who fails with respect to a proceeding or an interlocutoryapplication should pay costs to the party who succeeds.1 ("Costs follow the event").Proceeding is defined as meaning any application to the court for the exercise of thecivil jurisdiction of the court, other than an interlocutory application. An interlocutoryapplication is in turn defined as meaning an application made in accordance with r7.19 or r 7.41 of the High Court Rules 2016.[9] The arbitration before Hon BJ Paterson QC is neither a proceeding nor aninterlocutory application and, accordingly, the outcome of the arbitration should not,except in exceptional circumstances, be determinative of costs of a High Courtproceeding or interlocutory application.[10] Second, the determination of costs should be predictable and expeditious.2Costs are not predictable or expeditious if they depend on the outcome of a claimoutside of the court's processes.[11] Third, costs on an opposed interlocutory application, unless there are specialreasons to the contrary, must be fixed in accordance with the High Court Rules whenthe application is determined and become payable when they are fixed.31 High Court Rules 2016, r 14.2(1)(a).2 High Court Rules 2016, r 14.2(1)(g).3 High Court Rules 2016, r 14.8(1).[12] I am of the view that the fact the arbitrator reached the same conclusion whenthe matter was referred back to him by Heath J is not determinative of the costsapplication in the High Court. In criminal proceedings, a conviction may be quashedby the Court of Appeal, but on retrial the decisionmaker, whether it be judge or jury,may again find the appellant guilty and the court may also enter a conviction onceagain. That does not mean that the appeal was pointless. It is vitally important to getthe process right because due process is the key to justice.[13] There is no doubt that Forest Holdings succeeded in respect of all threehearings in the High Court. Mangatu failed. There is no principled basis on whichcosts could be awarded in favour of a losing party. The arbitration also continues.Forest Holdings has apparently instructed its solicitors to appeal the subsequent rulingon damages dated 7 March 2018.[14] I am, therefore, of the view that costs are properly payable by Mangatu toForest Holdings. In those circumstances, I do not need to consider the claim for costsagainst Mr Scott.[15] Forest Holdings has itemised its costs on a 2B basis. Issue was taken byMangatu to two items listed by Forest Holdings. I agree with both objections and Ihave made adjustments accordingly.[16] Mangatu is to pay the following sums to Forest Holdings in respect of the threehearings in the High Court.Item Description TimeallocationTotalForest Holdings' leave application22 Filing interlocutory application on notice forleave to appeal under Arbitration Act 19962 $4,460.0011 Filing joint memorandum of counsel fortelephone conference scheduled 1 November20160.4 $892.0012 Appearance at telephone conference on1 November 20160.3 $669.0040 Preparation of written submissions 1.5 $3,345.0041 Applicant's bundle of authorities 0.6 $1,338.0042 Appearance at hearing 0.25 $557.505.05 $11,261.50Forest Holdings' appeal56 Preparation of written submissions 3 $6,690.0055 Preparation of case on appeal – applicant'sbundle of key documents1 $2,230.0057 Appearance at hearing on 13 December 2016 0.5 $1,115.0011 Filing memorandum of applicant in response tominute dated 8 March 20170.2 $446.004.7 $10,481.00Mangatu's application for leave to appeal to Court of Appeal11 Memorandum of counsel for applicant forteleconference on 28 April 20170.4 $892.0013 Appearance at telephone conference on28 April 20170.3 $669.0023 Notice of opposition to interlocutoryapplication for leave to appeal to the Court ofAppeal0.6 $1,338.0011 Filing memorandum as to summary of issues 0.4 $892.0013 Appearance at telephone conference on16 May 2017 – dismissing Mangatu'sapplication to adduce further evidence0.3 $669.0024 Preparation of written submissions 1.5 $3,345.0026 Appearance at hearing of defended application 0.25 $557.50Total 3.75 $8,362.50Grand Total (three applications) 13.5 $30,105.00DisbursementsFiling Fee – leave to appeal $540.00Filing Fee – notice of opposition to Mangatu's applicationfor leave to appeal to the Court of Appeal.$110.00Total $650.00_________________________Woolford J